Cabral Hortacsu (2008) - Dynamics Of Seller Reputation

Reference(s)

Cabral, Luis and Ali Hortacsu (2008) "Dynamics of Seller Reputation: Theory and Evidence from eBay" forthcoming, Journal of Industrial Economics pdf

Abstract

We construct a panel of eBay seller histories and examine the impor- tance of eBay's reputation mechanism. We �nd that, when a seller �rst receives negative feedback, his weekly sales rate drops from a positive 5% to a negative 8%; subsequent negative feedback ratings arrive 25% more rapidly than the �rst one and don't have nearly as much impact as the �rst one. We also �nd that a seller is more likely to exit the lower his reputation is; and that, just before exiting, sellers receive more negative feedback than their lifetime average.